##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 For
the transition period from  to
 Commission File Number 001-14429
 SKECHERS U.S.A., INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    95-4376145(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)228 Manhattan Beach Blvd.Manhattan Beach, California
    
    90266(Address of Principal Executive Office)
    
    (Zip Code)
 (310) 318-3100
(Registrants Telephone Number, Including Area Code)
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



SKECHERS U.S.A., INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Financial Statements (Unaudited):Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive Income
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4.
    
    Controls and Procedures
    
    
    24PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    25Item 1A.
    
    Risk Factors
    
    
    25Item 5.
    
    Other Information
    
    
    27Item 6.
    
    Exhibits
    
    
    28Signatures
    
    
    29EX-10.3EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SKECHERS U.S.A., INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
 September 30,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    246,380
    
    
    $
    114,941Short-term investments
    
    
    30,000
    
    
    
    Trade accounts receivable, less allowances of $14,957 in 2009 and $14,880 in 2008
    
    
    204,997
    
    
    
    175,064Other receivables
    
    
    11,037
    
    
    
    7,816Total receivables
    
    
    216,034
    
    
    
    182,880Inventories
    
    
    191,819
    
    
    
    261,209Prepaid expenses and other current assets
    
    
    28,915
    
    
    
    31,022Deferred tax assets
    
    
    11,955
    
    
    
    11,955Total current assets
    
    
    725,103
    
    
    
    602,007Property and equipment, at cost, less accumulated depreciation and amortization
    
    
    172,624
    
    
    
    157,757Intangible assets, less accumulated amortization
    
    
    4,867
    
    
    
    5,407Deferred tax assets
    
    
    12,610
    
    
    
    18,158Long-term marketable securities
    
    
    
    
    
    
    81,925Other assets, at cost
    
    
    12,630
    
    
    
    11,062TOTAL ASSETS
    
    $
    927,834
    
    
    $
    876,316LIABILITIES AND EQUITYCurrent Liabilities:Current installments of long-term borrowings
    
    
    583
    
    
    
    572Short-term borrowings
    
    
    525
    
    
    
    Accounts payable
    
    
    160,776
    
    
    
    164,643Accrued expenses
    
    
    33,460
    
    
    
    23,021Total current liabilities
    
    
    195,344
    
    
    
    188,236Long-term borrowings, excluding current installments
    
    
    15,751
    
    
    
    16,188Total liabilities
    
    
    211,095
    
    
    
    204,424Commitments and contingenciesEquity:Preferred Stock, $.001 par value; 10,000 authorized; none issued and outstanding
    
    
    
    
    
    
    Class A Common Stock, $.001 par value; 100,000 shares authorized; 33,684 and
33,410 shares issued and outstanding at September 30, 2009 and December
31, 2008, respectively
    
    
    34
    
    
    
    33Class B Common Stock, $.001 par value; 100,000 shares authorized; 12,738 and
12,782 shares issued and outstanding at September 30, 2009 and December
31, 2008, respectively
    
    
    13
    
    
    
    13Additional paid-in capital
    
    
    267,396
    
    
    
    264,200Accumulated other comprehensive income (loss)
    
    
    8,315
    
    
    
    (4,719
    )Retained earnings
    
    
    435,919
    
    
    
    409,166Skechers U.S.A., Inc. equity
    
    
    711,677
    
    
    
    668,693Noncontrolling interest
    
    
    5,062
    
    
    
    3,199Total equity
    
    
    716,739
    
    
    
    671,892TOTAL LIABILITIES AND EQUITY
    
    $
    927,834
    
    
    $
    876,316
  3




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##### Table of Contents



SKECHERS U.S.A., INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share data)
 Three-Months Ended September 30,
    
    
    Nine-Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    405,374
    
    
    $
    403,159
    
    
    $
    1,047,820
    
    
    $
    1,142,656Cost of sales
    
    
    221,648
    
    
    
    231,628
    
    
    
    616,062
    
    
    
    641,760Gross profit
    
    
    183,726
    
    
    
    171,531
    
    
    
    431,758
    
    
    
    500,896Royalty income
    
    
    418
    
    
    
    591
    
    
    
    1,022
    
    
    
    1,660184,144
    
    
    
    172,122
    
    
    
    432,780
    
    
    
    502,556Operating expenses:Selling
    
    
    41,245
    
    
    
    40,911
    
    
    
    97,568
    
    
    
    105,037General and administrative
    
    
    110,454
    
    
    
    106,462
    
    
    
    304,340
    
    
    
    304,540151,699
    
    
    
    147,373
    
    
    
    401,908
    
    
    
    409,577Earnings from operations
    
    
    32,445
    
    
    
    24,749
    
    
    
    30,872
    
    
    
    92,979Other income (expense):Interest income
    
    
    322
    
    
    
    1,618
    
    
    
    1,612
    
    
    
    5,911Interest expense
    
    
    (987
    )
    
    
    (1,264
    )
    
    
    (1,944
    )
    
    
    (3,616
    )Other, net
    
    
    2,176
    
    
    
    (828
    )
    
    
    2,203
    
    
    
    (81
    )1,511
    
    
    
    (474
    )
    
    
    1,871
    
    
    
    2,214Earnings before income taxes (benefit)
    
    
    33,956
    
    
    
    24,275
    
    
    
    32,743
    
    
    
    95,193Income tax (benefit) expense
    
    
    10,175
    
    
    
    (3,639
    )
    
    
    8,236
    
    
    
    20,175Net earnings
    
    
    23,781
    
    
    
    27,914
    
    
    
    24,507
    
    
    
    75,018Less: Net loss attributable to noncontrolling interest
    
    
    (679
    )
    
    
    (375
    )
    
    
    (2,246
    )
    
    
    (756
    )Net earnings attributable to Skechers U.S.A., Inc.
    
    $
    24,460
    
    
    $
    28,289
    
    
    $
    26,753
    
    
    $
    75,774Net earnings per share attributable to Skechers U.S.A., Inc.:Basic
    
    $
    0.53
    
    
    $
    0.61
    
    
    $
    0.58
    
    
    $
    1.65Diluted
    
    $
    0.52
    
    
    $
    0.60
    
    
    $
    0.57
    
    
    $
    1.62Weighted average shares used in calculating earnings per
share attributable to Skechers U.S.A., Inc.:Basic
    
    
    46,405
    
    
    
    46,115
    
    
    
    46,304
    
    
    
    46,000Diluted
    
    
    47,095
    
    
    
    46,835
    
    
    
    46,649
    
    
    
    46,770Comprehensive income:Net earnings
    
    $
    24,460
    
    
    $
    28,289
    
    
    $
    26,753
    
    
    $
    75,774Unrealized gain (loss) on marketable securities, net of tax
    
    
    
    
    
    
    (1,496
    )
    
    
    8,151
    
    
    
    (5,402
    )Gain (loss) on foreign currency translation adjustment, net
of tax
    
    
    1,009
    
    
    
    (8,618
    )
    
    
    4,883
    
    
    
    (7,728
    )Total comprehensive income
    
    $
    25,469
    
    
    $
    18,175
    
    
    $
    39,787
    
    
    $
    62,644
  4




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SKECHERS U.S.A., INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 Nine-Months Ended September 30,2009
    
    
    2008Cash flows from operating activities:Net earnings
    
    $
    26,753
    
    
    $
    75,774Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:Noncontrolling interest in subsidiaries
    
    
    (2,246
    )
    
    
    (756
    )Depreciation of property and equipment
    
    
    14,465
    
    
    
    12,855Amortization of deferred financing costs
    
    
    370
    
    
    
    Amortization of intangible assets
    
    
    579
    
    
    
    120Provision for bad debts and returns
    
    
    2,959
    
    
    
    8,617Tax benefits from stock-based compensation
    
    
    
    
    
    
    561Non-cash stock compensation
    
    
    2,464
    
    
    
    1,698Loss on disposal of property and equipment
    
    
    2
    
    
    
    1,525Provision for deferred income taxes
    
    
    (614
    )
    
    
    Impairment of property and equipment
    
    
    761
    
    
    
    (Increase) decrease in assets:Receivables
    
    
    (31,039
    )
    
    
    (55,234
    )Inventories
    
    
    70,925
    
    
    
    (46,762
    )Prepaid expenses and other current assets
    
    
    2,369
    
    
    
    (13,891
    )Other assets
    
    
    (1,362
    )
    
    
    (12,753
    )Increase (decrease) in liabilities:Accounts payable
    
    
    (6,339
    )
    
    
    11,354Accrued expenses
    
    
    10,229
    
    
    
    2,265Net cash provided by (used in) operating activities
    
    
    90,276
    
    
    
    (14,627
    )Cash flows from investing activities:Capital expenditures
    
    
    (31,197
    )
    
    
    (47,802
    )Purchases of investments
    
    
    (30,000
    )
    
    
    (11,725
    )Maturities of investments
    
    
    375
    
    
    
    20,375Redemption of auction rate securities
    
    
    95,250
    
    
    
    Net cash provided by (used in) investing activities
    
    
    34,428
    
    
    
    (39,152
    )Cash flows from financing activities:Net proceeds from the issuances of stock through employee stock
purchase plan and the exercise of stock options
    
    
    1,344
    
    
    
    2,903Payments on long-term debt
    
    
    (275
    )
    
    
    (315
    )Increase in short-term borrowings
    
    
    525
    
    
    
    Contribution from noncontrolling interest of consolidated entity
    
    
    4,000
    
    
    
    3,000Excess tax benefits from stock-based compensation
    
    
    
    
    
    
    559Net cash provided by financing activities
    
    
    5,594
    
    
    
    6,147Net increase (decrease) in cash and cash equivalents
    
    
    130,298
    
    
    
    (47,632
    )Effect of exchange rates on cash and cash equivalents
    
    
    1,141
    
    
    
    (904
    )Cash and cash equivalents at beginning of the period
    
    
    114,941
    
    
    
    199,516Cash and cash equivalents at end of the period
    
    $
    246,380
    
    
    $
    150,980Supplemental disclosures of cash flow information:Cash paid during the period for:Interest, net of amounts capitalized
    
    $
    3,260
    
    
    $
    3,951Income taxes
    
    
    1,624
    
    
    
    14,502Non-cash investing and financing activities:Acquisition of Chilean distributor
    
    
    4,382
    
    
    
    
  5




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SKECHERS U.S.A., INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  SEPTEMBER 30, 2009 and 2008  (Unaudited)
 (1) GENERAL
 Basis of Presentation
   Use of Estimates
  Noncontrolling interests
   6




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Recent accounting pronouncements
  (2) INVESTMENTS
  (3) REVENUE RECOGNITION
   (4) OTHER COMPREHENSIVE INCOME
  7




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Three-Months Ended
    
    
    Nine-Months EndedSeptember 30, 2009
    
    
    September 30, 2009Net earnings
    
    $
    23,781
    
    
    $
    24,507Unrealized gain on marketable securities, net of tax
    
    
    
    
    
    
    8,151Gain on foreign currency translation adjustment, net of tax
    
    
    1,093
    
    
    
    4,992Comprehensive income
    
    
    24,874
    
    
    
    37,650Comprehensive loss attributable to noncontrolling interest
    
    
    (595
    )
    
    
    (2,137
    )Comprehensive income attributable to parent
    
    $
    25,469
    
    
    $
    39,787
 (5) STOCK COMPENSATION
   WEIGHTED
    
    
    WEIGHTED AVERAGE
    
    
    AGGREGATEAVERAGE
    
    
    REMAINING
    
    
    INTRINSICSHARES
    
    
    EXERCISE PRICE
    
    
    CONTRACTUAL TERM
    
    
    VALUEOutstanding at December 31, 2008
    
    
    1,739,721
    
    
    $
    11.79Granted
    
    
    
    
    
    
    Exercised
    
    
    (59,782
    )
    
    
    9.48Cancelled
    
    
    (107,945
    )
    
    
    11.20Outstanding at September 30, 2009
    
    
    1,571,994
    
    
    
    11.92
    
    
    2.2 years
    
    $
    9,232,409Exercisable at September 30, 2009
    
    
    1,571,994
    
    
    
    11.92
    
    
    2.2 years
    
    $
    9,232,409
  WEIGHTED AVERAGEGRANT-DATE FAIRSHARES
    
    
    VALUENonvested at December 31, 2008
    
    
    217,284
    
    
    $
    16.97Granted
    
    
    1,816,500
    
    
    
    17.94Vested
    
    
    (102,640
    )
    
    
    17.20Cancelled
    
    
    
    
    
    
    Nonvested at September 30, 2009
    
    
    1,931,144
    
    
    
    17.87
  (6) EARNINGS PER SHARE
  8




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Three-Months Ended September 30,
    
    Nine-Months Ended September 30,Basic earnings per share
    
    2009
    
    2008
    
    2009
    
    2008Net earnings attributable to Skechers U.S.A., Inc.
    
    $
    24,460
    
    
    $
    28,289
    
    
    $
    26,753
    
    
    $
    75,774Weighted average common shares outstanding
    
    
    46,405
    
    
    
    46,115
    
    
    
    46,304
    
    
    
    46,000Basic earnings per share attributable to
Skechers U.S.A., Inc.
    
    $
    0.53
    
    
    $
    0.61
    
    
    $
    0.58
    
    
    $
    1.65
  Three-Months Ended September 30,
    
    
    Nine-Months Ended September 30,Diluted earnings per share
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net earnings attributable to Skechers U.S.A., Inc.
    
    $
    24,460
    
    
    $
    28,289
    
    
    $
    26,753
    
    
    $
    75,774Weighted average common shares outstanding
    
    
    46,405
    
    
    
    46,115
    
    
    
    46,304
    
    
    
    46,000Dilutive effect of stock options
    
    
    690
    
    
    
    720
    
    
    
    345
    
    
    
    770Weighted average common shares outstanding
    
    
    47,095
    
    
    
    46,835
    
    
    
    46,649
    
    
    
    46,770Diluted earnings per share attributable to
Skechers U.S.A., Inc.
    
    $
    0.52
    
    
    $
    0.60
    
    
    $
    0.57
    
    
    $
    1.62
  (7) INCOME TAXES
  9




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(8) LINE OF CREDIT AND SHORT-TERM BORROWINGS
  (9) STOCKHOLDERS EQUITY
   10




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Nine-Months EndedSeptember 30, 2009Noncontrolling interest, January 1, 2009
    
    $
    3,199Net loss attributable to noncontrolling interest
    
    
    (2,246
    )Foreign currency translation adjustment
    
    
    109Capital contribution by noncontrolling interest
    
    
    4,000Noncontrolling interest, September 30, 2009
    
    $
    5,062
 (10) SEGMENT AND GEOGRAPHIC REPORTING INFORMATION
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net salesDomestic wholesale
    
    $
    202,963
    
    
    $
    225,706
    
    
    $
    544,352
    
    
    $
    647,890International wholesale
    
    
    100,099
    
    
    
    93,371
    
    
    
    261,140
    
    
    
    270,338Retail
    
    
    95,250
    
    
    
    79,275
    
    
    
    227,541
    
    
    
    211,027E-commerce
    
    
    7,062
    
    
    
    4,807
    
    
    
    14,787
    
    
    
    13,401Total
    
    $
    405,374
    
    
    $
    403,159
    
    
    $
    1,047,820
    
    
    $
    1,142,656
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Gross profitDomestic wholesale
    
    $
    82,328
    
    
    $
    82,365
    
    
    $
    194,715
    
    
    $
    246,425International wholesale
    
    
    39,281
    
    
    
    39,183
    
    
    
    93,127
    
    
    
    119,413Retail
    
    
    58,449
    
    
    
    47,897
    
    
    
    136,113
    
    
    
    128,703E-commerce
    
    
    3,668
    
    
    
    2,086
    
    
    
    7,803
    
    
    
    6,355Total
    
    $
    183,726
    
    
    $
    171,531
    
    
    $
    431,758
    
    
    $
    500,896
 September 30, 2009
    
    
    December 31, 2008Identifiable assetsDomestic wholesale
    
    $
    725,242
    
    
    $
    678,881International wholesale
    
    
    109,584
    
    
    
    110,930Retail
    
    
    92,685
    
    
    
    86,236E-commerce
    
    
    323
    
    
    
    269Total
    
    $
    927,834
    
    
    $
    876,316
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Additions to property and equipmentDomestic wholesale
    
    $
    402
    
    
    $
    7,209
    
    
    $
    19,628
    
    
    $
    30,938International wholesale
    
    
    1,718
    
    
    
    1,306
    
    
    
    4,811
    
    
    
    2,041Retail
    
    
    2,217
    
    
    
    1,449
    
    
    
    6,758
    
    
    
    14,823Total
    
    $
    4,337
    
    
    $
    9,964
    
    
    $
    31,197
    
    
    $
    47,802
 11




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Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales (1)United States
    
    $
    296,458
    
    
    $
    302,959
    
    
    $
    766,865
    
    
    $
    852,913Canada
    
    
    14,044
    
    
    
    12,350
    
    
    
    29,988
    
    
    
    36,654Other international (2)
    
    
    94,872
    
    
    
    87,850
    
    
    
    250,967
    
    
    
    253,089Total
    
    $
    405,374
    
    
    $
    403,159
    
    
    $
    1,047,820
    
    
    $
    1,142,656
 September 30, 2009
    
    
    December 31, 2008Long-lived assetsUnited States
    
    $
    162,773
    
    
    $
    148,228Canada
    
    
    960
    
    
    
    471Other international (2)
    
    
    8,891
    
    
    
    9,058Total
    
    $
    172,624
    
    
    $
    157,757
 
 (1)
    
    The Company has subsidiaries in Canada, the United Kingdom, Germany, France, Spain, Italy,
Netherlands, Brazil, Chile and joint ventures in China, Hong Kong, Malaysia, Singapore and
Thailand that generate net sales within those respective countries and in some cases the
neighboring regions. The Company also has a subsidiary in Switzerland that generates net
sales from that country in addition to net sales to our distributors located in numerous
non-European countries. Net sales are attributable to geographic regions based on the location
of the Company subsidiary.(2)
    
    Other international consists of Brazil, Chile, China, Hong Kong, Malaysia, Singapore,
Thailand, Switzerland, the United Kingdom, Germany, France, Spain, Italy and Netherlands. (11) BUSINESS AND CREDIT CONCENTRATIONS
    12




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Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Manufacturer #1
    
    
    30.1
    %
    
    
    31.9
    %
    
    
    27.8
    %
    
    
    31.6
    %Manufacturer #2
    
    
    14.7
    %
    
    
    12.1
    %
    
    
    12.5
    %
    
    
    11.7
    %Manufacturer #3
    
    
    11.6
    %
    
    
    10.0
    %
    
    
    11.4
    %
    
    
    9.1
    %Manufacturer #4
    
    
    11.1
    %
    
    
    5.8
    %
    
    
    10.6
    %
    
    
    6.5
    %Manufacturer #5
    
    
    4.7
    %
    
    
    5.4
    %
    
    
    6.0
    %
    
    
    6.4
    %72.2
    %
    
    
    65.2
    %
    
    
    68.3
    %
    
    
    65.3
    %
  13




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    international, national and local general economic, political and market conditions
including the recent global economic slowdown and financial crisis;
    
    sustaining, managing and forecasting our costs and proper inventory levels;
    
    losing any significant customers, decreased demand by industry retailers and
cancellation of order commitments due to the lack of popularity of particular designs
and/or categories of our products;
    
    maintaining our brand image and intense competition among sellers of footwear for
consumers;
    
    anticipating, identifying, interpreting or forecasting changes in fashion trends,
consumer demand for the products and the various market factors described above;
    
    sales levels during the spring, back-to-school and holiday selling seasons; and
    
    other factors referenced or incorporated by reference in our companys annual report
on Form 10-K for the year ended December 31, 2008.
    14




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##### Table of Contents



Three-Months Ended September 30,2009
    
    
    2008Percentage of revenues by segmentDomestic wholesale
    
    
    50.1
    %
    
    
    56.0
    %International wholesale
    
    
    24.7
    %
    
    
    23.1
    %Retail
    
    
    23.5
    %
    
    
    19.7
    %E-commerce
    
    
    1.7
    %
    
    
    1.2
    %Total
    
    
    100
    %
    
    
    100
    %
    Three-Months Ended September 30,
    
    
    Nine-Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    405,374
    
    
    
    100.0
    %
    
    $
    403,159
    
    
    
    100.0
    %
    
    $
    1,047,820
    
    
    
    100.0
    %
    
    $
    1,142,656
    
    
    
    100.0
    %Cost of sales
    
    
    221,648
    
    
    
    54.7
    
    
    
    231,628
    
    
    
    57.5
    
    
    
    616,062
    
    
    
    58.8
    
    
    
    641,760
    
    
    
    56.2Gross profit
    
    
    183,726
    
    
    
    45.3
    
    
    
    171,531
    
    
    
    42.5
    
    
    
    431,758
    
    
    
    41.2
    
    
    
    500,896
    
    
    
    43.8Royalty income
    
    
    418
    
    
    
    0.1
    
    
    
    591
    
    
    
    0.2
    
    
    
    1,022
    
    
    
    0.1
    
    
    
    1,660
    
    
    
    0.2184,144
    
    
    
    45.4
    
    
    
    172,122
    
    
    
    42.7
    
    
    
    432,780
    
    
    
    41.3
    
    
    
    502,556
    
    
    
    44.0Operating expenses:Selling
    
    
    41,245
    
    
    
    10.2
    
    
    
    40,911
    
    
    
    10.2
    
    
    
    97,568
    
    
    
    9.3
    
    
    
    105,037
    
    
    
    9.2General and administrative
    
    
    110,454
    
    
    
    27.2
    
    
    
    106,462
    
    
    
    26.4
    
    
    
    304,340
    
    
    
    29.1
    
    
    
    304,540
    
    
    
    26.6151,699
    
    
    
    37.4
    
    
    
    147,373
    
    
    
    36.6
    
    
    
    401,908
    
    
    
    38.4
    
    
    
    409,577
    
    
    
    35.8Earnings from operations
    
    
    32,445
    
    
    
    8.0
    
    
    
    24,749
    
    
    
    6.1
    
    
    
    30,872
    
    
    
    2.9
    
    
    
    92,979
    
    
    
    8.2Interest income
    
    
    322
    
    
    
    0.1
    
    
    
    1,618
    
    
    
    0.4
    
    
    
    1,612
    
    
    
    0.2
    
    
    
    5,911
    
    
    
    0.5Interest expense
    
    
    (987
    )
    
    
    (0.2
    )
    
    
    (1,264
    )
    
    
    (0.3
    )
    
    
    (1,944
    )
    
    
    (0.2
    )
    
    
    (3,616
    )
    
    
    (0.3
    )Other, net
    
    
    2,176
    
    
    
    0.5
    
    
    
    (828
    )
    
    
    (0.2
    )
    
    
    2,203
    
    
    
    0.2
    
    
    
    (81
    )
    
    
    Earnings before income taxes
    
    
    33,956
    
    
    
    8.4
    
    
    
    24,275
    
    
    
    6.0
    
    
    
    32,743
    
    
    
    3.1
    
    
    
    95,193
    
    
    
    8.4Income tax expense (benefit)
    
    
    10,175
    
    
    
    2.5
    
    
    
    (3,639
    )
    
    
    (0.9
    )
    
    
    8,236
    
    
    
    0.8
    
    
    
    20,175
    
    
    
    1.9Net earnings
    
    
    23,781
    
    
    
    5.9
    
    
    
    27,914
    
    
    
    6.9
    
    
    
    24,507
    
    
    
    2.3
    
    
    
    75,018
    
    
    
    6.5Less: Net loss
attributable to
noncontrolling interest
    
    
    (679
    )
    
    
    (0.1
    )
    
    
    (375
    )
    
    
    (0.1
    )
    
    
    (2,246
    )
    
    
    (0.3
    )
    
    
    (756
    )
    
    
    (0.1
    )Net earnings attributable
to Skechers U.S.A., Inc.
    
    $
    24,460
    
    
    
    6.0
    %
    
    $
    28,289
    
    
    
    7.0
    %
    
    $
    26,753
    
    
    
    2.6
    %
    
    $
    75,774
    
    
    
    6.6
    %
 15




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Net sales
      Gross profit
  16




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Selling expenses
   General and administrative expenses
  17




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Interest income
  Interest expense
  Income taxes
  Noncontrolling interest in net loss of consolidated subsidiaries
   Net sales
   18




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Gross profit
    19




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Selling expenses
  General and administrative expenses
  Interest income
  Interest expense
  Income taxes
  20




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Noncontrolling interest in net loss of consolidated subsidiaries
         21




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The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles.
 22




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23




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Interest rate fluctuations
 Foreign exchange rate fluctuations
  
 ITEM 4. CONTROLS AND PROCEDURES
    24




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PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   
 ITEM 1A. RISK FACTORS
  25




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We Depend Upon A Relatively Small Group Of Customers For A Large Portion Of Our Sales.
  We Rely On Independent Contract Manufacturers And, As A Result, Are Exposed To Potential
Disruptions In Product Supply.
   One Principal Stockholder Is Able To Exert Significant Influence Over All Matters Requiring A Vote
Of Our Stockholders And His Interests May Differ From The Interests Of Our Other Stockholders.
  26




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We Have Recently Entered The Highly Competitive Performance Footwear Market.
  
 ITEM 5. OTHER INFORMATION
    27




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ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description10.1
    
    Credit Agreement dated June 30, 2009, by and among the Registrant,
certain of its subsidiaries that are also borrowers under the Agreement,
and certain lenders including Wells Fargo Foothill, LLC, as co-lead
arranger and administrative agent, Bank of America, N.A., as syndication
agent, and Banc of America Securities LLC, as the other co-lead arranger
(incorporated by reference to exhibit number 10.1 of the Registrants
Form 8-K filed with the Securities and Exchange Commission on July 7,
2009).10.2
    
    Schedule 1.1 of Defined Terms to the Credit Agreement dated June 30,
2009, by and among the Registrant, certain of its subsidiaries that are
also borrowers under the Agreement, and certain lenders including Wells
Fargo Foothill, LLC, Bank of America, N.A., and Banc of America
Securities LLC (incorporated by reference to exhibit number 10.2 of the
Registrants Form 8-K filed with the Securities and Exchange Commission
on July 7, 2009).10.3
    
    Amendment Number One to Credit Agreement dated November 5, 2009, by and
among the Registrant, certain of its subsidiaries that are also borrowers
under the Agreement, and certain lenders including Wells Fargo Foothill,
LLC, as co-lead arranger and administrative agent, Bank of America, N.A.,
as syndication agent, and Banc of America Securities LLC, as the other
co-lead arranger.31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer and the Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ***
 
 ***
    
    In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed
filed for the purposes of Section 18 of the Exchange Act or otherwise subject to the
liability of that section, nor shall it be deemed incorporated by reference in any filing under
the Securities Act of 1933, as amended, or the Exchange Act. 28




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SIGNATURES
  Date: November 6, 2009
    SKECHERS U.S.A., INC.By:
    /S/ DAVID WEINBERGDavid WeinbergChief Financial Officer
(Principal Financial and Accounting Officer) 29